# Answer to Question #47602 in Macroeconomics for joy

Question #47602

given that c=200+0.8(y-t).

a. what is the equilibrium level of national income?

b. derive the savings function and find the level of savings.

a. what is the equilibrium level of national income?

b. derive the savings function and find the level of savings.

Expert's answer

c = 200 + 0.8(y - t)

a. the equilibrium level of national income will be:

c = 200 + 0.8y - 0.8t, so

0.8y = c + 0.8t - 200

y = 1.25c + t - 250

b. derive the savings function and find the level of savings.

s = y - c - t = y - 200 - 0.8y + 0.8t - t = 0.2y - 0.2t - 200 = 0.2(y - t) - 200

a. the equilibrium level of national income will be:

c = 200 + 0.8y - 0.8t, so

0.8y = c + 0.8t - 200

y = 1.25c + t - 250

b. derive the savings function and find the level of savings.

s = y - c - t = y - 200 - 0.8y + 0.8t - t = 0.2y - 0.2t - 200 = 0.2(y - t) - 200

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